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The Supreme Court will meet on Wednesday in an unusual pre-term session for an unusual event – to rehear oral argument in Citizens United v. Federal Election Commission, for the express purpose of considering whether either or both of two major campaign finance precedents, Austin v. Michigan Chamber of Commerce (1990) and McConnell v. Federal Election Commission (2003) should be overruled. Much is at stake, although people seem to disagree as to what, exactly. To some, the case is about protecting free speech, and even preventing books from being banned by the government. To others, it is about protecting the democratic process, and preventing large corporations and unions from dominating the political process. All seem to agree it is one of the most important cases to reach the Court in years.

First the dull stuff: Under Federal law, it has been illegal for corporations to spend money on candidate races since 1943. (This is a narrower prohibition than it sounds, as corporations could, until 2002, pay for or run “issue ads,” that discuss candidates and issues so long as they do not “expressly advocate” the election or defeat of a candidate – these are the ads you often see that conclude, e.g., “Call Senator X, and tell him it’s time for him to put the people ahead of the special interests.”)

This type of prohibition was upheld in the Austin case. Since the McCain-Feingold law of 2002, however, it has also been illegal for corporations to pay for any broadcast, cable, or satellite communication, including "issue ads," that even mentions a candidate for federal office within 30 days of a primary or 60 days of a general election (called “electioneering communications” in the statute). Relying on Austin, this was upheld in McConnell, although in the 2007 case of Federal Election Commission v. Wisconsin Right to Life, the Supreme Court carved out an exception for such ads if they were susceptible to a reasonable interpretation as something other than a plea to vote for or against a candidate.

Citizens United is an incorporated conservative advocacy group that in late 2007 produced a documentary called, “Hillary: The Movie.” It is a none-too-subtle “expose” of then Democratic presidential front-runner Hillary Clinton. Citizens United both wanted to advertise the movie and distribute it through video on demand (using satellite technology) within 30 days of several primaries. Citizens United sued the FEC to allow it to advertise and to distribute the movie. Lower courts, relying on Austin and McConnell, said no. And so the case went to the Supreme Court, where most observers predicted a victory for Citizens United, presumably through the Court carving out some new exception to the actual language of the statute.

But that’s not what happened. Instead, in a remarkable oral argument, Deputy Solicitor General Malcolm Stewart and the justices engaged in an exchange which is too lengthy to quote here, but which readers owe it to themselves to review in its entirety (the transcript can be found here, http://www.supremecourtus.gov/oral_arguments/argument_transcripts/08-205.pdf, with the relevant portion running from p. 26 through p. 40.) The upshot is that Stewart argued that the government, under the Austin and McConnell precedents, had the constitutional authority to ban books if they were published by corporations (as, of course, virtually all books are), and any other form of corporate communication as well, including movies, advertisements for Barack Obama action figures, newsletters, internet communications, and more.

After the argument, many supporters of campaign finance regulations were highly critical of Stewart, arguing that he had thoroughly mishandled the argument by making such “extreme” claims. But in fact, Stewart had not gone walkabout – his argument was exactly what the government argued in its briefs, and in fact what the government has argued for years, and in fact what a plain reading of the Austin and McConnell opinions means. The only difference is that, for the first time in years, the justices seemed to actually grasp the nettle of the constitutional theory offered up in defense of campaign finance regulation, and they were shocked. The idea of "banning books" struck a nerve in a way that prior cases merely discussing "corporate speech" had not.

And so, perhaps not surprisingly, the Court has decided to take this opportunity to review its jurisprudence in the area, and in particular the McConnell and Austin decisions. If Austin is overruled, the federal prohibition on corporate expenditures in political races, and similar laws in 22 states, would be declared unconstitutional. Merely overruling McConnell would have less impact but still be far reaching.

Reflecting the stakes, the reargument has attracted over 40 friend of the court briefs, running nearly two to one in favor of overruling Austin and McConnell. The strange bedfellows include the ACLU and the NRA, the U.S. Chamber of Commerce and the AFL-CIO, the leftist Alliance Defense Fund and the libertarian Institute for Justice, the National Association of Broadcasters, the Reporters Committee for Freedom of the Press, a group of campaign finance scholars, and the eight former Federal Election Commissioners, including this writer. But the government is not without powerful supporters of its own, a similarly ramshackle coalition including, among others, Senator John McCain, the Democratic National Committee, the Committee for Economic Development and the League of Women Voters.

But what exactly are those stakes? First, the Court could still issue a narrow ruling, holding, for example, that ads for the movie are protected under the exception carved out by the Court in Wisconsin Right to Life, and that the statute must exempt books and movies. The problem is that this would merely put matters off. A major reason it has taken until now for the Court to grasp the idea that its prior rulings, taken seriously, justify banning books and video on demand is that these were not historically areas of campaigning. But with each wave of campaign finance reform, more modes of political expression are limited or banned, and so speakers then gravitate toward as yet unregulated modes of speech. For example, if the Court holds that “Hillary: The Movie” is banned but decides not to address whether or not Austin really allows for books to be banned, expect to see a lot more overtly political books in 2012. See here for some of the books that the government claims the Constitutional authority to ban.

The second problem is the complexity of the law, which has turned the simple eloquence of the First Amendment – “Congress shall make no law… “ – into a complex regulatory maze that few Americans could recognize or understand. As we noted in the former Commissioners amicus brief, the law now imposes complex and distinct regulations on 71 different types of speakers, and 33 different forms of speech. The Federal Election Campaign Act totals 244 pages, with an additional 568 pages of FEC regulations. These regulations are further explained in 1278 pages of “explanation and justification,” and over 1770 “advisory opinions” issued by the FEC since 1976. Making still more narrow constitutionally required “exceptions” to the law is problematic, at best. Moreover, modern technology is making it harder for such exceptions to stand. For example, what, in the era of internet blogs, YouTube videos, and inexpensive self publication of books, is meant by the “press exemption?” As traditional newspapers close and companies such as GE operate television networks, does it really make sense to have an exemption for “press” corporations? Can the law survive without it? Or would the First Amendment allow the government to regulate press reporting on politics?

Having invited the parties to discuss the overruling of Austin, it will be hard for the Court not to take the that step.

Assuming a broad ruling, what would be the effects? First, a bit about what is and is not at stake. Trevor Potter, President of the Campaign Legal Center and advisor to Senator McCain, has argued that this case would only overturn the ban on corporate expenditures, thereby unfairly leaving unions still subject to the ban. But this is only true in the most technical sense. I know of no expert in the field who seriously believes that the current ban on union expenditures can survive the overruling of Austin. That is why the AFL-CIO has in fact filed a brief in support of overruling Austin. No friend of big business, the AFL-CIO nonetheless recognizes that its Constitutional rights to free speech are, in this instance, inevitably tied to those of the business community.

A second error some have made is to assume that if Citizens United wins, corporations will be able to contribute directly to candidates. Citizens United only challenges the ban on independent expenditures by corporations. The Supreme Court, for various reasons we need not address here, has long held that the Constitution gives Congress and state legislatures more leeway to regulate direct contributions to a political campaign than to regulate speech independent of a campaign. Only independent speech is at issue in this case – if Citizens United wins, corporations will still be prohibited from contributing to a candidate’s campaign, running ads at the suggestion or request of a campaign, or “coordinating” their political activities with a campaign.

The government, and Austin’s other supporters, also argue that corporations will dominate the political debate, spending, in the words of Democracy 21 President Fred Wertheimer, “hundreds of millions” to defeat candidates. There are three answers to this argument. The first is that that’s OK – corporate shareholders, or in the case of non-profits, corporate members, should have a right to express themselves on political issues. Of course, Wertheimer and others consider it bad, and it may be, but that is not self-evidently true. Similarly, some think corporate speech is obviously protected by the Constitution, and others think not. Whatever one thinks of those underlying questions, however, Wertheimer’s claims are almost certainly overblown.

For example, a majority of states currently allow corporate expenditures in state political races, and these states are not generally presumed to be under corporate dominance. Indeed, many such states are doing quite well. One such state, Texas, is leading the nation in job growth during this tough economy. Virginia and Utah, to give to other examples, have no limits at all on corporate participation, and are routinely rated as among the best governed states in the nation. Supporters of regulation argue, however, that the stakes are greater at the federal level, so the state comparisons are not apt. Those who favor overruling Austin respond that it is much easier to dominate a state’s politics than those of the federal government.

Additionally, though, there is experience at the federal level to draw on. Prior to McCain-Feingold, corporations could pay for hard hitting “issue ads” that often looked little different than campaign ads. In fact, regulatory advocates, including Wertheimer, argued successfully in McConnell that such ads could be constitutionally regulated under McCain-Feingold because they were the “functional equivalent” of campaign ads. But if that is true, then the argument now cuts the other way – there is no particular reason to expect more corporate ads if Austin and McConnell are overruled than we had prior to 2002, when corporations could pay with impunity for “issue ads” that Wertheimer claims are the “functional equivalent” of the ads they will be allowed to run if the cases are overruled. In those days, corporations did spend many millions on such issue ads, but they were, even at their peak, but a small portion of total political spending. Indeed, fewer than 10 corporations spent even so much as $2.5 million in such “soft money” in the 2002 election cycle. Most of the billions now spent on politics will probably continue to come from individuals. Wertheimer obviously would not like a return to the pre-2002 status quo, but that status quo suggests that his predictions of doom are overstated. In fact, I suspect most people won't notice much difference.

The third argument raised by the government and its various supporters is that the prohibition on corporate expenditures is necessary to protect shareholders from having their money spent on political causes with which they disagree. In making this argument, they note that for many shareholders – for example, those with company directed 401k plans - it is extremely difficult to sell off shares of companies spending funds on political issues with which they disagree, so the speech is essentially involuntary.

But on close examination this argument seems something of a makeweight to cover a perceived lack of receptiveness they expect the Court to have to their First Amendment arguments. For example, many of the groups making this argument, including the Brennan Center for Justice in New York, and the Committee for Economic Development, are in fact funded by corporations. Yet these organizations have never suggested that it is problematic when corporations give them money to advance political agendas with which some shareholders of these corporations, trapped in their 410k plans, might disagree. In fact, corporations fund all sorts of controversial political speech with which many shareholders will disagree, such as funding college lecture series that invite controversial speakers such as Ward Churchill or Ward Connerly; funding art museums that display controversial works such as those by Robert Mapplethorpe; or funding charities that perform abortions, such as Planned Parenthood, or discriminate against homosexuals, such as the Boy Scouts. The fact that the restrictions on corporate political giving are in the election code, rather than the corporate code, suggests that the real objective is to prevent certain types of political speech that the sponsors don’t like, rather than to protect shareholders. Nor do they explain why the law should apply even to ideological membership organizations, such as Citizens United, or to closely held corporations where all shareholders may be in agreement.

In more blatant political terms, many observers seem to assume that the GOP will benefit if the ban on corporate spending is struck down as unconstitutional. But this is not obviously true – in 2002, for example, the last year of corporate “soft money” before McCain-Feingold and the McConnell decision, the three largest corporate spenders all spent entirely in favor of Democrats. More to the point, though, First Amendment cannot turn on who will gain a partisan edge – that is precisely why the First Amendment prohibits government from regulating speech.

The Court has never taken an absolutist approach to the First Amendment, but the question here is whether it has allowed too much legislative regulation. At oral argument, the government laid forth its regulatory claims with a candor not often seen, and even long time supporters of regulatory authority on the court, such as Justice Souter, seemed to recoil.

It is true that if Austin and McConnell are overruled, it will be a big deal, but as is often the case, we can overstate the impact. Will it mean a “free for all” or a “wild west” approach to campaigns (assuming that would be bad)? No. Corporations and unions will still be prohibited from contributing to candidates, individual limits on contributions will remain in place, disclosure laws will still be in effect, and political committees will still have to register with the government before speaking out. In fact, political campaign speech will still be more heavily regulated than it was at any time in our nation’s history between the repeal of the Alien and Sedition Acts in 1801 and the passage of the Federal Election Campaign Act of 1971. Even the most ardent regulator can probably live with that.

My prediction: The Court overrules Austin, 5-4, majority opinion by Kennedy. There will be two or more concurrences. Justices Stevens and Ginsburg will dissent. Justice Breyer will concur only in the judgment (i.e, Citizens United has a right to publish its movie), and write a lengthy opinion dissenting in part to disagree with overruling Austin and McConnell. Sotomayor will join one of the latter two camps.

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